As far as the general sentiment in the business community is concerned this year’s Budget reflects a feel of reality and showcases India’s self-belief. The corporate and industry captains are happy that the budget has not imposed any taxes and simplified the mode of doing business.
In his remarks after the Union Budget was tabled in the Lok Sabha, the Prime Minister said that the Budget carries a vision of Aatamnirbharta and inclusion of every citizen and section. He said that the principles behind the Budget include – providing new opportunities, infrastructure development and helping new sectors grow.
The Prime Minister said that the Budget will enhance ‘ease of living’ for the common man by simplifying procedure and rules and bring positive changes for individuals, investors, industry and infrastructure.
Here’s what the industry and corporate sector have to say about the budget:
Manish Sharma, President and CEO, Panasonic India & SA, Chairperson -Electronics & Manufacturing Committee, FICCI
“The Budget presented by the Honorable FM in the background of five mini budgets is a continuum of reformative measures to boost the economy to drive – Job, Demand and Spending. I believe the methodical approach of identifying six focus areas where Health and Infrastructure, with a significant increase in allocations, sit on the top is in the right direction to revitalize the economy and invest in the well-being of people.
For manufacturers, Government re-iterated its commitment to reforms like the introduction of Production Linked Incentive (PLI) scheme with a budget outlay of Rs 1.97 lakh crores across 13 sectors which reaffirms their intent to provide impetus to domestic manufacturing, while elevating India’s position as a global manufacturing champion. We look forward to the implementation details here to participate. The increased spending on infrastructure to improve roads and public transport is also a positive move and will provide easy access to raw material.
From the common man’s perspective, the Government ensured no new taxes on corporates or individuals but further simplified the norms on Direct Taxes.
To ensure fiscal deficit at 6.8%, the Government announced a slew of expenditure and measures along with a clear roadmap to raise funds from strategic disinvestment, tax compliance and borrowing. This is re-imagination of a New World Order post-pandemic and now the key will be in implementation that will define the results.”
Ravichandran Purushothaman, President, Danfoss India
The Union Budgets provision for doubling the MSME allocation and setting aside Rs 15,700 crore in FY22 is a testament to the nation’s resolve towards strengthening its local manufacturing base and realizing its vision for a self-reliant India. Further, Rs. 1.97 lakh crore allocated over the next 5 years for Production Linked Incentive Schemes to create manufacturing global champions for an Aatmanirbhar Bharat will nurture size and scale and create jobs for youth. The enhanced outlay of 1,18,101 crores announced for the development of the Roads and Highways infrastructure would benefit the corollary industries like cement, steel and transportation, showcasing the potential for recovery from the slowdown presented by the lockdown. In light of the government’s move towards reducing air-pollution and the impetus provided to the renewable energy sector, sustainability-oriented products can be effective drivers of maximizing energy efficiency and a big contributor to the reduction in air pollution and decarburization. The budget has attempted to strike a balance between supporting growth and a modest deficit reduction. The budget addresses issues of supply scarring and the demand constraints across all industries and a set of fiscal and tax relief measures that would go a long way in boosting aggregate demand.
Manish Rathi, CEO & co-founder, IntrCity RailYatri
“Finance Minister Nirmala Sitharaman needs to be complimented for the budget outlay and significantly enhanced focus on highways expansion and rail network this will boost intercity mobility in India. We welcome the finance minister’s new initiative to promote public bus transport services at a cost of 18,000 crores along with the deployment of innovative PPP models to enable private sector players to finance, acquire, operate and maintain over 20,000 buses. Her National Rail Plan to create a ‘future-ready’ Railway system by 2030 is unprecedented.
100% electrification of broad-gauge routes by December 2023, indigenously developed automatic train protection system, eliminating train collision due to human error are some of the other outstanding examples of the FM’s vision to give shape to vibrant and truly Aatmanirbhar Bharat.
We congratulate her for presenting the first paperless budget and deserve full praise for outdoing her last two budgets – on 5 July 2019 and 1 February 2020 and that too in these difficult times.”
Rajan Navani, Vice Chairman & Managing Director, JetSynthesys
I’m happy to see the Union Budget 2021 is a forward-looking one, with massive spend commitment by the government across many sectors combined with large divestment and monetization, along with the privatization of two public banks and one insurance company. This is a great trajectory for banking in India. Also, the increase in FDI in insurance to 74% with management control will help in attracting FDI from the world, further boosting the economy. I’m particularly excited about the government’s commitment to set aside an outlay of INR 50000 Cr for the National Research Foundation, the setting up of a new Fintech hub, and an allocation to incentivize digital payments. Also, as we complete 75 years of independence, the move to exempt senior citizens over 75 years from filing tax returns if they are only on pension is a great tribute to their contribution to India. The budget also had a number of bold initiatives to simplify tax processes for businesses and honest tax-payers. The extension of the tax holiday and exemption of capital gains will also enable businesses and startups to focus on growing their business. Most importantly, the proposed use of data analytics, Artificial Intelligence and Machine Learning, optimising the Ministry of Corporate Affairs and tax portals, is indicative of the New India of 2022. I hope this forward-looking budget will help revive India’s economy, propelling it further towards a digitally empowered tomorrow.
Dr Rahul Sharma – Director (India), International Zinc Association
We welcome the initiatives that have been announced today by Finance Minister Nirmala Sitharaman on the sidelines of infrastructure. National and state-specific highway projects will push the usage of commodities like steel, aluminium and zinc which in turn which forms the base of the economic growth. Notably, state-specific highway projects including the ones proposed in West Bengal, Tamil Nadu, and Kerala are critical as most of them fall on the coastal lines that are subjected to humidity and varying temperatures. We’re hopeful that project development in these areas incorporates appropriate corrosion protection measures as crucial infrastructure projects such as this form the backbone of our country. Additionally, MSME’s and other allied sectors were severely hit by the pandemic led price hikes in commodities including steel and other metals. The reduction in custom duties will provide them with much-required relief and will encourage players to enhance their production capacities. This will not only encourage the domestic players to expand their operations and will further lead to employment opportunities thereby making India self-reliant.”
Gautam Mohanka, Managing Director, Gautam Solar
“This is an intelligently drafted budget, especially for the renewable energy sector. It has already been established that solar energy has a huge potential in India; this budget recognizes the importance of the sector and promises to make it even stronger. To build up domestic capacity, there will be a phased manufacturing plan of solar cells and solar panels. The government is also raising duty on solar inverters from 5% to 20% and on solar lanterns from 5% to 15% to encourage domestic production. This is a commendable step and it adheres to the “Make in India” and “Vocal for Local” campaigns.
The additional infusion of Rs. 1,000 crores to SECI and Rs. 1,500 crores to IREDA by the government will further boost the non-conventional energy sector. Besides these welcome changes, the Finance Minister has also made two other significant provisions in this year’s budget for the energy sector. They are focused on disinvestment, with the Finance Minister setting a target of Rs 1.75 lakh for 2021-22 and monetization of public sector assets.
These measures will surely help the energy sector to grow at a rapid pace and also help domestic power plants to contribute significantly to the country’s economic growth.
Rachit Chawla, CEO & Founder, Finway FSC.
FDI: The Union Finance minister announced a widely acclaimed move of raising the FDI limit from 49% to 74%. The revised structure directs that the positions of majority directors and key management be filled by resident Indians. At least 50% of the directors must be independent directors and a fixed percentage of the profits must be retained as general reserves. The landmark move is aimed at improving the transparency of operations and attracting more investment in the sector.
PSU Divestment: A 1.75 lakh crore divestment of PSUs across sectors is only slightly lower than the record of 2.1 lakh crore budgeted from the CPSE (Central Public Sector Enterprises) divestment in 2020. Rs 1 lakh crore is to come from selling government stake in public sector banks and financial institutions. Rs 75,000 crore would come as CPSE disinvestment receipts.
Fiscal Deficit: The government has announced a fiscal deficit of 9.5 per cent for the current fiscal with a plan to bring it down to below 4.5% by 2025-26. The government has pegged the fiscal deficit at 6.8% for the coming fiscal 2021-22.
As per the Centre’s new disinvestment policy, every PSU in all but 4 strategic sectors will be privatised. The budget revealed that the IPO of LIC will be brought soon for which the requisite amendments shall be introduced. Several transactions namely BPCL, Air India, Shipping Corporation of India, Container Corporation of India, IDBI Bank, Bharat Earth Movers Limited, Pawan Hans, Neelachal Ispat Nigam Limited among others will be completed in 2021-22. Other than IDBI Bank, the FM proposed to take up two Public Sector Banks and one General Insurance Company in the year 2021-22. Additionally, the Hon FM stated that an incentive package of Central funds will be given to the states to encourage the latter to speed up disinvestment.
The fiscal deficit had widened to 145.5% of the entire year’s budget estimates (BE) at 11.58 lakh by Dec 2020! Sitharaman also proposed a sharp rise in the government’s CapEx & provided Rs 5.54 lakh crore (34.5% more than the budget estimate for 2020-21) The government will also approach the markets in a few days to raise an additional 80,000 crore that it would require. States will receive 2 lakh crore from the centre for CapEx.
Vinay Bagri, CEO and Co-founder, Niyo – a digital banking fintech startup
“The Union Budget 2021 has been in the favor of the Fintech and startup community. After the last one year of pandemic and the impact it has had on the Fintech sector, the facilitation of a world-class fintech hub at GIFT city is a huge step in providing further growth opportunities to the sector. Given the need for a digital shift with an aim of having a cashless economy, the allocation of 1500 crores for the promotion of digital payments comes at the right time.
The startup sector has been one of the most affected sectors in the pandemic. Finance ministry’s move to extend tax holidays for startups until March 2022 will offer much-needed relief and boost productivity in the coming future. This along with the decision to allow incorporation of one-person companies will further empower the overall sector, thus leading to innovation as well as the birth of new startups.
The government’s announcement of social security benefits for the gig and platform workers is a first of a kind initiative which will give further impetus to financial inclusion. The announcement of ‘One Nation One Ration Card’ for migrant workers and provision of minimum wages to all categories including women, will further contribute in strengthening the migrant workers’ position in the economy by providing them with the required economic support thus safeguarding their future.”
Aditya Kushwaha, CEO & Director, Axis Ecorp
We welcome the first digital budget presented by the Finance Minister. The budget is largely focused on healthcare and infrastructure, which will have a ripple effect on the development in the other sectors including real estate. The finance minister has also given special importance to human capital. Steps taken in this direction in conjunction with growth in infrastructure will lead to an increase in the disposable income of people which could bring a good scope for investment in real estate.
In the Annual budget for 2021 too, we can see the Government’s focus on affordable housing. The deduction on payment of interest for affordable housing has been extended by a year. This move will improve customer buying behaviour. At the same time, to boost the investment coming via the NRI route, the taxation has been simplified which will incentivize NRIs to invest in our country as they will get a tax rebate on the rental income. This move will also give a boost to holiday homes and commercial real estate in the country.
Furthermore, there have been relaxations offered in real estate transactions, capital gains, business profits, and rental income which in turn will uplift the real estate sector.
Aproov Jain, CEO, and Co-Founder, Express Stores
“The budget gave major emphasis to healthcare and infra sectors. Besides, a host of substantial announcements were made on the divestment front, including the coming IPO of Life Insurance Corporation. Incentivization to one person company by removing capital limits, free conversions and overhauling residency limits definitely will boost the startup ecosystem in India. We welcome the move to help India’s startups beat pandemic blues, the tax holiday extended by one more year to March 2022 during Budget presentations today. The capital gains exemption given to startups was also extended by a year more.”
Raktim Chattopadhyay, Founder & CEO, Esperer Onco Nutrition (EON) Pvt Ltd
As per the latest report by McKinsey by 2030, India needs to generate 90 million non-farming jobs over the next decade, which is possible if the GDP growth remains consistently above 8%. The recent GDP growth has been just 4%.
With above context and with the world’s largest immunisation drive already underway, economic recovery is the major focus of Budget 2021.
Ravichandran Purushothaman, President, Danfoss India
The Union Budget 2021 heralds a positive turn in the infrastructure ecosystem of the country. The proposed investment on various infrastructure development projects under the National Infrastructure Pipeline will set India on the right path towards improving the ease and standard of living across major Indian cities. Further, the investments in infrastructure will be pivotal in enhancing the nation’s manufacturing prowess, thereby acting as a catalyst in India’s journey towards becoming a powerhouse for local production.
The allocation of INR 1000 crores and 1500 crores for the solar and renewable energy sectors respectively is indeed a commendable move by the centre for achieving the nation’s targets for Renewable Energy. The budgetary allocations towards reducing air pollution is a welcome step as it will incentivise firms to invest in low carbon technology and fasten their transition towards carbon neutrality.
Added to this, the National Skill Development Agency’s special emphasis on infrastructure-focused skill development and the move to include young engineers in the Project Preparation Facility for upcoming projects will play a pivotal role in addressing the issue of skill gap and job creation among the nation’s workforce.